Marginal Tax Rate

Suppose a taxpayer has taxable income of $100 and faces a marginal tax rate of 20%. Use this info to answer questions 1 and 2.

1. What is the taxpayer’s tax liability?

Your response should be formatted as follows: $x so 10 dollars would be formatted as $10

2. What is the taxpayer’s average tax rate?

Your response should be formatted as follows: x% so 10 percent would be formatted as 10%

3. Does the federal government personal income tax use a graduated tax rate schedule or a linear tax rate schedule?

a. Linear

b. Graduated

4. Does Indiana’s personal income tax use a graduated tax rate schedule or a linear tax rate schedule?

a. Graduated

b.Linear

5. We know a tax system is progressive if:

a. AVERAGE TAX RATE INCREASES WITH INCOME

b. AVERAGE TAX RATE DECLINES WITH INCOME.

c. AVERAGE TAX RATE DOES NOT VARY WITH INCOME.